Question

Bogart Company is considering two alternatives. Alternative A will have revenues of $149,700 and costs of $100,600. Alternative B will have revenues of $182,200 and costs of $124,900. Compare Alternative A to Alternative B showing incremental revenues, costs, and net income. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Answer 1

Alternative B should be preferred as it gives higher net income.

Step-by-step explanation:

The revenues from alternative A is $149,700.

The costs from alternative A is $100,600.

The net income from alternative A is

= Revenue - Costs

= $149,700 - $100,600

= $49,100

The revenues from alternative B is $182,200.

The costs from alternative A is $124,900.

The net income from alternative B is

= Revenue - Costs

= $182,200 - $124,900

= $57,300

The alternative B gives higher net income so it should be preferred.